Legislative Update - Discussion draft of cost recovery, tax accounting (Senate Finance staff) 

November 21: Senate Finance Chairman Max Baucus today released a staff “discussion draft” containing proposals to reform cost recovery and tax accounting rules.

Two previous discussion drafts have been released in the past two days – one on international tax reform and another on administrative tax reform.

Today’s package of reforms includes a number of provisions aimed at modernizing and simplifying cost recovery and tax accounting rules and at reducing tax burdens on small businesses. According to a Finance Committee summary, these reforms would also raise enough revenue from corporations in the long-term to finance a significant reduction in the corporate tax rate.

According to a one-page summary [PDF 197 KB], the deprecation of tangible assets reforms would:

  • Replace the current rules with a system that better approximates economic depreciation based on estimates from the Congressional Budget Office
  • Reduce the number of major depreciation rates from more than 40 to five
  • Eliminate the need for businesses to calculate depreciation separately for each of their assets, other than real property

Other measures would address amortization of intangible assets, repeal LIFO accounting and the like-kind exchange rules, and simplify and reduce tax burdens for small businesses by permanently increasing Section 179 expensing to $1 million and allowing all companies with gross receipts under $10 million to use cash accounting and expense inventory costs.

Comments on the cost recovery and tax accounting discussion draft are requested by January 17, 2014.


Documents posted on the Finance Committee website include:

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